Court Of Appeal New South Wales

C M Sappideen & P J Butt, Perpetuities Act1984 (1986) The Law Book Company LtdCoke on Littleton 18th edition (1823)Cruise, A Digest of the Laws of EnglandRespecting Real Property, 4th ed (1835)English Law Reform Committee, FourthReport, The Rule against Perpetuities(1956) Cmnd 18J D Heydon and M J Leeming, Jacobs' Lawof Trusts in Australia, 7th edition (2006)J D Heydon, The Restraint of TradeDoctrine, 3rd edition (2008)J U Lewis, "Sir Edward Coke (1552-1633):His Theory of 'Artificial Reason' as a Contextfor Modern Basic Legal Theory" (1968) 84Law Quarterly Review 330J W Carter, E Peden and G J Tolhurst,Contract Law in Australia, 5th edition (2007)M I Schnebly, "Restraints Upon theAlienation of Legal Interests" (1935) 44 YaleLaw Journal 961New South Wales Law Reform Commission,Report on Perpetuities and Accumulations,(1976) LRC 26R Cross and J W Harris, Precedent inEnglish Law, 4th ed (1991)R Meagher, J D Heydon and M J Leeming,Meagher, Gummow and Lehane's EquityDoctrines & Remedies, 4th edition (2002)Sheppard's Touchstone, 8th edition (1826)Category:Principal judgmentParties:Bondi Beach Astra Retirement Village PtyLtd (Appellant)Geraldine Lois Gora as Co-Executrix of theEstate of the late Clifford Evans (FirstRespondent)Rhonda Jean Rytmeister as Co-Executrix ofthe Estate of the late Clifford Evans (SecondRespondent)Lee Bronwyn Evans as Co-Executrix of theEstate of he late Clifford Evans (ThirdRespondent)Representation- Counsel:Counsel-8-

B DeBuse (Appellant)GA Moore (Respondents)- Solicitors:SolicitorsMcCooe Raves & Poole (Appellant)McPhee Kelshaw Solicitors (Respondents)File number(s):2010/68048Decision Under Appeal- Court / Tribunal:- Before:Bryson AJ- Date of Decision:19 February 2010- Citation:Bondi Beach Astra Retirement Village PtyLtd v Gora [2010] NSWSC 81- Court File Number(s)2008/278565Publication Restriction:JUDGMENTTABLE OF CONTENTSJUDGMENT OF GILES JA1JUDGMENT OF CAMPBELL JA6Nature of the Case7PART A - FACTS14The Occupancy Agreement21Events Relating to Exercise of the Option32PART B - EFFECTIVE EXERCISE OF THE OPTION?56The Decision Below56-9-

1Decision Re Exercise of Option63PART C - ABANDONMENT87PART D - WAS BBA A VOLUNTEER?107PART E - RETRAINT ON ALIENATION?130Provisions of Occupancy Agreement Not Earlier Set Out134The Buyback Deed137The Law Concerning Restraints on Alienation141Predecessors to Hall v Busst141Coke on Littleton142Seventeenth Century Cases158Nineteenth and Twentieth Century Cases before Hall v Busst168Hall v Busst193Reuthlinger v MacDonald207Wollondilly v Picton Power Lines221Elton v Cavill and Elton v Cavill (No 2)257Caboche v Ramsay271Allstate Prospecting v PosGold Mines275Nitschke288Other Cases After Hall v Busst295Evidence Relied on Concerning Restraint on Alienation316Application of Principles319The Statutory Framework344Orders367JUDGMENT OF WHEALY JA370GILES JA : Subject to the following observations, for the reasons given byCampbell JA the orders proposed by his Honour should be made.- 10 -

2The reasons amply reveal that the historical foundation for, and disparateformulations of, invalidity as a restraint on alienation are not a sound basisfor acting upon rigid rules in modern times. If there were a clear commonlaw rule applicable in the present case it would have to be applied, butthere is not.3On the authority of Hall v Busst (1960) 104 CLR 206, at least forcontractual restraints invalidity is now founded on a public policy in favourof free alienability of property. Like any such policy matter, it must bebalanced with other policies and given effect only if the circumstances sorequire. The remark of Gummow J in Caboche v Ramsay (1993) 119 ALR215 at 232 that "the question is one of degree" can extend to thecommand of free alienability in the particular circumstances.4There are many inroads into free alienability of property. From Reuthlingerv MacDonald (1976) 1 NSWLR 88 and its approval on appeal, a restraintimposed for the protection of a valid collateral object is not invalid. Thisshould not be seen as a particular principle of its own: it is an expressionof circumstances in which the public policy in favour of free alienability ofproperty does not hold sway, because on balance the public interest isbetter served by permitting the restraint. Regard should not be confined tothe purpose of the parties to the restraint, but extends to the social utility ofpermitting restraints of that nature. I remain of the view expressed inMoraitis Fresh Packaging (NSW) Pty Ltd v Fresh Express (Australia) PtyLtd [2008] NSWCA 327 at [81].5For the reasons given by Campbell JA, and without any need to join in hisHonour's detailed observations on cases on other facts, restraints of thepresent kind in the provision and operation of retirement villages servesound purposes. They have been recognised in legislation. The age of 55leaves many useful years, but can mark a change in lifestyle including tothe world of a retirement village. To those who wish it, many or perhaps- 11 -

most of whom will need to take care with their finances, a lesser capitaloutlay at the cost of restraints of the kind in the present case will beacceptable, if not attractive. As retirement villages are conducted, theresult will not be that property is taken out of commerce because it isinalienable. It will be cycled through successive residents of the retirementvillage. Public policy does not require that the restraints be struck down.6CAMPBELL JA :Nature of the Case7The Astra was once a hotel located at the intersection of Campbell Paradeand Sir Thomas Mitchell Road, Bondi Beach. In January 1985 CGMaloney Pty Ltd (" CGM ") procured the registration of a strata plan for thebuilding, and set about marketing the units in it, on the basis that thebuilding would be administered as a retirement village.8The conveyancing and administrative arrangements under which theretirement village was to operate were unusual. In broad terms, apurchaser would purchase a strata title unit from CGM, on terms requiringit to enter into two agreements with the Appellant, Bondi Beach AstraRetirement Village Pty Ltd (" BBA "). One of those agreements, called anOccupancy Agreement, was to be entered between BBA on the one part,and the proprietor and occupier of the unit. It contained an option entitlingBBA to acquire the unit for a price equal to that which the proprietor hadpaid for it (minus certain adjustments) in various events, one of which wasthe death of the proprietor. The other deed, called a Buyback Deed, wasentered between BBA, the proprietor and occupant. It conferred put andcall options on both BBA, and the proprietor, entitling BBA to require theproprietor to sell the unit, and entitling the proprietor to require BBA topurchase the unit. That sale was to be at the price that the proprietor hadoriginally paid for it (minus certain adjustments). The options arose in- 12 -

various circumstances, including if the proprietor wished to sell the unit. Adefinition extended "proprietor" to include successors in title of theproprietor.9The late Mr Clifford Evans and his wife Dorothy Evans purchased lot 40 inthe strata plan, as joint tenants. They entered an Occupancy Agreementand a Buyback Deed. Upon the death of Mrs Evans, Mr Evans became thesole proprietor and occupant of the unit. The Respondents to this appealare the daughters of Mr and Mrs Evans, who are also the executrices of MrEvans.10After the death of Mr Evans, there were some communications betweenthe solicitors for BBA and the Respondents, concerning exercise by BBAof the option to purchase contained in the Occupancy Agreement.11Eventually BBA commenced litigation against the Respondents,contending that it had validly exercised the option to purchase. Asultimately formulated in the Second Further Amended Statement of Claim,it sought a declaration that it had validly exercised the option for purchase,an order for specific performance of that agreement, or alternatively,damages for breach of that contract. Alternatively, it sought a declarationthat the Respondents were bound not to sell, transfer or otherwise disposeof the unit otherwise than to pursuant to the provisions of the BuybackDeed. As a further alternative, it sought a declaration that should theRespondents wish to sell, transfer or dispose of the Unit to any purchaserwho must be a qualified occupant, they must cause that purchaser to enterinto an Occupancy Agreement with BBA on the same terms and conditionsas the Occupancy Agreement entered into by Mr and Mrs Evans uponpurchase of the Unit, including the further obligation recorded in clause 2of the Buyback Deed. That obligation was, in broad terms, to require anyfurther purchaser to agree to the same restrictions on transfer. Thepleading also sought an order that BBA could maintain a caveat recording- 13 -

that right. Finally, there was a claim based on estoppel, that has not beenpressed on the appeal.12Bryson AJ dismissed BBA's proceedings: Bondi Beach Astra RetirementVillage Pty Ltd v Gora [2010] NSWSC 81.13This appeal gives rise to the following issues:(1) Whether BBA gave the type of notice necessary for exercise of theoption to purchase. I have concluded that it did not.(2) Whether any contract resulting from exercise of the option has beenabandoned. That issue does not arise, because of my answer to the firstissue. However, if my answer to the first issue were wrong I wouldconclude the contract had been abandoned.(3) If a contract resulting from exercise of the option was still on foot whenthe matter came to court, whether BBA was ineligible for the grant ofequitable relief because it was a volunteer. Again, this issue does not arisebecause of my answers to the first two questions. However, if my answersto those issues were wrong, my answer to this issue would be "no" .(4) Whether the option in the Occupancy Agreement, the option in theBuyback Deed, or both of those options are void by reason of the publicpolicy concerning restraints on alienation of property. An aspect of thatissue is whether the Respondents are obliged only to dispose of theproperty to a person who agrees to be subject to the same restrictions ontransfer that the Occupancy Agreement and the Buyback Deed purport toimpose on the Respondents. I have concluded that neither of the options isvoid and that the Respondents are subject to the obligation concerning towhom they may transfer the property.- 14 -

PART A - FACTS14The first Annual General Meeting of the body corporate was held on 12December 1986. One of its resolutions was to adopt a by-law 32, whichprovided:"That exclusive use of those parts of the Common Propertycomprising the swimming pool area, passageways and corridorson all floors, the courtyard areas, and the residents' facilities andlounges on the ground floor will be granted to the ServiceCompany subject to the Service Company properly maintainingand keeping in good repair those areas and that in accordancewith the Occupancy Agreement the Service Company will sublicence all proprietors and occupiers of the residential lots to permitthem to use such areas."In that resolution the "Service Company" was BBA.15On 1 July 1987 Mr and Mrs Evans entered a contract with CGM for thesale and purchase of lot 40 in the strata plan, for the price of 107,000.The contract was in the form of the 1986 edition of the standard formAgreement for Sale of Land produced by the Law Society of New SouthWales and the Real Estate Institute of New South Wales, with someamendments and special conditions. It stated the address of Mr and MrsEvans as being at a home unit in Hastings Parade, Bondi Beach. Pursuantto the second schedule of the contract, the title was subject to restrictionsas to user created by the registration of the strata plan. There was in factonly such restriction as to user, namely:"No person other than a person aged 55 years or over shalloccupy any lot herein provided that:(a) a person not being aged 55 years or over may reside with theoccupier of the lot being a person aged 55 years or over in any lotherein:- 15 -

(b) this restriction shall not apply to the occupation of lot 4 in theevent that such lot is used as the residence of a manager of theBondi Beach Astra Retirement Village."16One of the special conditions required the purchasers upon completion toenter into and procure the occupant of the lot to enter into two deeds, thetext of which was annexed to the contract. They have been referred to asthe Occupancy Agreement and the Buyback Deed.17Inappropriately, as the first Annual General Meeting of the body corporatehad already occurred, another special condition provided:"The parties acknowledge that it would be proposed at the firstAnnual General Meeting of the Body Corporate that exclusive useof those parts of the common property comprising the swimmingpool area, passageways and corridors on all floors, the courtyardareas, and the residents' facilities and lounges on the ground floorwill be granted to the Service Company subject to the ServiceCompany properly maintaining and keeping in good repair thoseareas and that in accordance with the Occupancy Agreement theService Company will sub-licence all proprietors and occupiers ofthe residential lots to permit them to use such areas."18The by-laws that had been adopted on 12 December 1986 were registeredon 3 August 1987.19On 22 September 1987 settlement of the transaction occurred. Mr and MrsEvans received a Real Property Act 1900 transfer from CGM relating tolot 40. That transfer was registered on 10 December 1987.20On 30 September 1987 Mr and Mrs Evans entered the OccupancyAgreement and the Buyback Deed that are at the heart of this litigation.The Occupancy Agreement- 16 -

21The Occupancy Agreement took the form of a deed, expressed to bebetween three parties. The first of them was BBA, called "the ServiceCompany". The second of them was Mr and Mrs Evans, called"Occupant". The third of them was Mr and Mrs Evans again, this timecalled "Proprietor".22The Deed recited CGM's renovation of the Astra "which is planned to bethe residence of persons of 55 years of age and over ", and that theProprietor was registered or entitled to be registered as proprietor of theunit. It continued:"C. The Service Company has or will be as far as legally possiblegranted exclusive use and possession of the Communal Areas.D. The parties hereto desire to enter into an agreement for thewelfare, regulation and conduct of all unit owners at the Astra andthe Occupant and the Proprietor have requested that the ServiceCompany manage and administer the Astra and the CommunalAreas to ensure that the residents of the Village enjoy suchreasonable privacy and quiet possession and enjoyment as isconsistent with the physical characteristics of a retirement villagedesigned for the residence of persons 55 years of age and over."23BBA promised to carry out various tasks concerning the operation of theretirement village. I will consider those promises in more detail later, whenexamining the argument that BBA is a volunteer and thus not entitled to anequitable remedy.24There are some other provisions of the Occupancy Agreement that arerelevant to the argument about whether either or both of the optionsbreach the public policy concerning restraint on alienation. I will deal withthose provisions when considering that topic.- 17 -

25BBA contends that in the present case the option to purchase wastriggered by Clause 7(a)(i) of the Occupancy Agreement. Clause 7commences:"The Occupant and the Proprietor covenant with the ServiceCompany that the right of the occupant to reside at the BondiBeach Astra, to the comm unal areas and occupy the unit shallcease and determine on the happening of any one or more of thefollowing events and the right granted to the Service Companypursuant to Clause 8 hereinafter appearing shall arise upon thehappening of any one or more of the following events:-(a) If the Occupant shall not qualify as a Qualified Occupant forany reason including without limiting the generality of theforegoing:-(i) if the Occupant shall die ."26There are some definitions contained in a Schedule to the OccupancyAgreement:"'The Occupant" - means and includes the said CLIFFORDEVANS and DOROTHY EVANS and his/her or their executors,administrators and successors in title.'The Proprietor' - means and includes the said CLIFFORD EVANSand DOROTHY EVANS . and his/her or their executors,administrators and successors in title being the registeredProprietor who is registered or entitled to be registered as theProprietor of the unit or any Mortgagee who has granted aMortgage to the Proprietor.'Qualified Occupant' - means a person who complies with therequirements of any s 88B Instrument registered on the title to thisor any other Unit and who has entered or has agreed to enter intoan occupancy agreement with the Service Company upon similarterms as are herein contained."- 18 -

27Clause 8 states the terms of the option:"(a) Upon the happening of any of the events referred to in Clause7 hereof the Service company shall have the option at any timethereafter by notice in writing (hereinafter called 'the DefaultBuyback Notice') served upon the Proprietor to require theProprietor to transfer the Unit to the Service Company or itsnominee for the price of One Hundred and Seven Thousanddollars ( 107,000.00) whereupon the following terms andconditions shall apply:(i) the parties shall upon the service of the Default BuybackNotice be deemed to have entered into an Agreement uponthe same terms and conditions as are contained in theStandard Agreement for Sale of Land - 1986 Edition withthe following alterations omissions and additions thereto:-(aa) Clause H shall be amended so that the 10% deposit ispayable by the Service Company to the Proprietor or theProprietor's Solicitor as stakeholder;(bb) Clause K shall be amended so that vacant possessionis given as at the date of completion;(cc) Clause 6(a) and 6 (b) of this Agreement shall becomea condition of and incorporated in the Agreement;(dd) There shall be attached to the Contract pursuant to s52A(2)(a) of the Conveyancing Act 1919 the documents orcopies of the documents referred to in the Fourth Schedulein the Standard Agreement for Sale of Land - 1986 Edition;(ee) Within fourteen (14) days of the service of the DefaultBuyback Notice the parties shall exchange formal writtenAgreements containing the above terms and conditions."- 19 -

28The Standard Agreement for Sale of Land - 1986 edition that is therebyincorporated contains, in item G of the particulars, provision for includingthe price, the deposit, and the balance. Item H of the particulars provides:"THE DEPOSIT is payable to * Vendor's Agent first named"29Item K in the particulars makes provision for stating the date as at whichthe benefit of possession is to be given, and whether the possession is tobe vacant possession, or subject to existing tenancies or occupanciesunder the Vendor as particularised in the contract.30As seen above in Clause 8

in the court below. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18 .